December 17, 2009

New Delhi, August 12, 2009:

Centre for Science and Environment (CSE) has claimed that the Indian government is talking in two voices when it comes to setting fuel economy standards for cars – and this is putting the country’s energy security and climate action plan at serious risk.

According to CSE, despite a clear direction from the Prime Minister’s Office (PMO) early this year that the Bureau of Energy Efficiency (BEE) will develop the fuel economy standards for cars under the Energy Conservation Act and the Union ministry of shipping, road transport and highways will enforce them, nothing has moved. A reminder from the pmo in June has not made any impact on these official agencies.

Says Anumita Roychowdhury, associate director, CSE and head of its Right to Clean Air Campaign: “Clearly, the commitment to set these standards under the National Climate Action Plan and the National Mission on Sustainable Habitat has been swept under the carpet.”

“The car industry has got away with self-labeling of car models -- without any official fuel economy labeling programme and standards. Even after three years of discussion, there are no targets for improving fuel efficiency of the car fleet in a time-bound manner,” adds Roychowdhury.

Cars: the pain, not the panacea
This inordinate delay in setting standards is unacceptable, says CSE, when evidences are mounting to show that cars are the highest emitters of heat-trapping CO2 amongst all segments of vehicles. What’s more, their emissions are set to peak.

A recent estimate by CSE shows that cars in Delhi spew more than half of the CO2 load from vehicles. This estimate has been supported by the findings of SIM Air’s 20 cities study that shows that in Delhi, cars emit as much as 56 per cent of the CO2 from vehicles. Additionally, in most key cities of India, the share of the CO2 load of cars is more than a quarter to over half of the total CO2 emissions from vehicles. The International Energy Agency has already predicted that future increases in fuel demand and CO2 emissions in India’s road transport sector will be driven by cars.

The Indian market, so far dominated by small cars, is steadily shifting towards the mid to large car segments. These segments already represent about 36 per cent of the total car sales. This trend is supported by the on-road surveys carried out by rites and the Delhi transport department that show that nearly 30 per cent of the cars on Delhi’s roads are already mid-size and large cars. This is ominous when car sales are poised to explode once again. As more large cars (that are much less fuel-efficient than smaller cars) are sold, the total fleet’s fuel economy will worsen.

A tale of official apathy and inaction
The government continues to ignore the implications of these trends for overall energy security and the costs to the nation. That the costs can be enormous is starkly evident from the ongoing review -- by the International Council on Clean Transportation (ICCT) -- of global fiscal policies that influence passenger vehicle CO2 emission and fuel economy. The review has found that fuel economy of the car fleet declines for a given increase in large vehicle market share at a ratio of about 0.2:1 – this means a 10 per cent increase in large vehicle sales results in a 2 per cent deterioration in fleet fuel economy. Or roughly, an additional 17,500 barrels of oil will be consumed annually by those 10 per cent large vehicle sales. Why should the Indian government let the country and the climate bear this unacceptable cost on account of luxury consumption, asks Roychowdhury.

This clearly runs counter to the government’s objective of improving vehicle fuel economy to safeguard India’s energy security and meet its climate goals. Already, the Union ministry of petroleum and natural gas has pressed the alarm button this year over the increase in crude oil imports that stands at 72 per cent of the domestic requirement.

The government fails to understand that the relief provided to consumers through tax cuts on large cars does not help in the long run. Consumers actually end up spending more on fuel during the life time of large cars – this nullifies the savings from tax cuts. The additional fuel will cost the consumer more than using a small car, nearly 50 per cent above the tax saving, as the icct estimates show. Moreover, considerable numbers of large cars are run mainly on diesel, which undermines air quality.

The Indian government should have learnt from the near bankruptcy of the Detroit car makers when the market turned harsh owing to rising oil prices and recession. This happened because they had invested hugely in inefficient fuel guzzling cars due to effective fuel economy standards. The Indian car industry is creating a similar trap for itself, warns CSE.

While the Auto Mission Plan aspires to make India a major auto hub, the country stands isolated for not having set any fuel economy regulations for cars. All major car producing regions of the world, including China and Korea, have set these regulations. This inactivity and apathy will undermine India’s competitiveness, energy security and its national climate action plan, says Roychowdhury.

What India needs to do
India needs to act fast. If the target of improving fuel efficiency by 50 per cent, as envisaged by India’s energy policy, is achieved by 2030-31, India can save 65 per cent of its total current consumption and reduce CO2 emissions equal to removing seven million of today’s four-wheelers.

The government, therefore, should take immediate steps to give an early deadline to implement fuel economy standards for cars, and introduce an official fuel economy labelling programme. Otherwise, policy inaction will amount to state-sponsored fuel guzzling.

For more on this, contact Anumita Roychowdhury on 98117 93923 or write to her at anumita@cseindia.org